Auto-Owners Ins. Co. v. Cook
| Decision Date | 09 March 2023 |
| Docket Number | 21-cv-348-JPG |
| Parties | AUTO-OWNERS INSURANCE COMPANY, Plaintiff, v. MICHAEL COOK, MICHAEL SCHUSTER, and HIGHLAND AUTO GLASS, INC., Defendants. |
| Court | U.S. District Court — Southern District of Illinois |
This matter comes before the Court on plaintiff Auto-Owners Insurance Company's motion for summary judgment pursuant to Federal Rule of Civil Procedure 56(a) (Doc. 46). Auto-Owners seeks declarations about the scope of coverage of an insurance policy it issued to Defendant Highland Auto Glass, Inc. Defendant Michael Schuster has responded to the motion (Doc. 53), and defendant Michael Cook has adopted Schuster's response (Doc. 54). Because the plain language of the relevant policy does not provide coverage, and because disallowing coverage does not violate Illinois public policy as it has existed since 1995, the Court will grant the summary judgment motion.
This case stems from an October 4, 2019, auto accident involving Schuster and Cook on one side, and Devin Dahmer on the other. Schuster, president and sole shareholder of Highland, was driving a van he and Highland jointly owned with Cook as his passenger. Both Schuster and Cook were injured in the accident. Cook sued Highland, Schuster, and Dahmer for negligence in Michael K. Cook v. Highland Auto Glass, Inc., et al., Case No. 2020-L-546, in the Circuit Court for the Third Judicial Circuit, Madison County, Illinois.
In this suit, Auto-Owners seeks declarations regarding a “Tailored Protection” insurance policy. The parties refer to the relevant policy as a “Garage Policy,” so the Court will too. In Count I, Auto-Owners seeks a declaration that it owes no liability coverage under the Garage Policy for Cook's bodily injury claims in the underlying negligence lawsuit and has no duty to defend or indemnify Highland or Schuster in connection with that lawsuit. In Count II, it seeks a declaration that there is no underinsured motorist coverage (“UIM”) for Cook's or Schuster's injuries.
In the pending motion, Auto-Owners seeks summary judgment on all counts except with respect to Cook's claim to UIM coverage, which he has withdrawn. Auto-Owners argues that the Garage Policy does not cover vehicles owned by Highland or Schuster like the vehicle involved in this accident. Schuster contends that such an exclusion for UIM coverage violates public policy and is therefore not enforceable.
Summary judgment must be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Spath v. Hayes Wheels Int'l-Ind., Inc., 211 F.3d 392, 396 (7th Cir. 2000). For the purposes of this motion, all parties essentially agree to the relevant facts, so the question is whether Auto-Owners is entitled to judgment as a matter of law on the questions at issue in the motion.
The accident happened on October 4, 2019, near a traffic roundabout in Highland, Illinois, on the Frank Watson Parkway. Schuster was driving a Ford Econoline van he and Highland owned jointly; Cook was his passenger. Schuster was carrying glass in the van as part of conducting Highland's business operations. Dahmer pulled his van into the roundabout in front of the Highland van, nearly missing the van. Down the road, Dahmer pulled over, and Schuster pulled the Highland van to the side of the road several car lengths in front of Dahmer's van. Schuster got out, and then Dahmer drove his van into the Highland van, injuring Schuster and Cook.
Dahmer's insurance paid its limits to Schuster, and now Schuster has made a claim for a defense, indemnity, and UIM coverage under Highland's Garage Policy.
At all relevant times, Garage Policy #50-955-220-00 that Auto-Owners issued to Highland was in place. When obtaining insurance from Auto-Owners, Highland had a choice of two garage liability coverage options-Division I or Division II-and it elected, and paid premiums for, coverage under Division II only. See Policy Declarations (Doc. 46-1 at 3-4). Where an insured selected only Division II coverage, the Garage Policy provided the following coverage for bodily injury arising out of an automobile accident:
Policy Section II, Coverage A, § 1.b(1) (Doc. 46-1 at 17). Other coverage for bodily injury arising out of an accident involving an automobile owned by the insured was available only to insureds who selected and paid for Division I coverage under the Garage Policy. Id. at § 1.b(2) (Doc. 46-1 at 17-18). Here, Schuster obtained other automobile insurance for vehicles he and/or Highland owned.
The Garage Policy also provided underinsured motorist coverage when a person was injured while occupying an automobile covered by the foregoing bodily injury policy coverage:
Policy, Underinsured Motorist Coverage, § 2.a (Doc. 46-1 at 50). Thus, there was underinsured motorist coverage for vehicles covered under Section II, including specifically vehicles covered under Section II, Coverage A, § 1.b(1).
Under Illinois law, which all parties agree applies to this action, an insurer has an obligation to defend its insured in an underlying lawsuit if the complaint in the underlying lawsuit alleges facts potentially within the coverage of the insurance policy, even if the allegations end up being groundless, false or fraudulent. Gen. Agents Ins. Co. of Am., Inc. v. Midwest Sporting Goods Co., 828 N.E.2d 1092, 1098 (Ill. 2005). To determine if the underlying suit alleges a situation potentially within the insurance coverage, the Court compares the complaint to the relevant provisions of the insurance policy. Id. If any theory of recovery in the underlying complaint falls within the insurance coverage, the insurer will have a duty to defend. Id. The duty to defend is broader than the duty to indemnify. Pekin Ins. Co. v. Wilson, 930 N.E.2d 1011, 1017 (Ill. 2010); Outboard Marine Corp. v. Liberty Mut. Ins. Co., 607 N.E.2d 1204, 1220 (Ill. 1992). Therefore, if the Court concludes there is no duty to defend, there is necessarily no duty to indemnify. Nat'l Cas. Co. v. McFatridge, 604 F.3d 335, 338 (7th Cir. 2010).
Under Illinois law, interpretation of an insurance policy, even an ambiguous policy, is a matter of law. Crum & Forster Managers Corp. v. Resolution Trust Corp., 620 N.E.2d 1073, 1077 (Ill. 1993); River v. Commercial Life Ins. Co., 160 F.3d 1164, 1169 (7th Cir. 1998). In interpreting a policy, the Court must attempt to effectuate the parties' intention as expressed by the policy. Valley Forge Ins. Co. v. Swiderski Elecs., Inc., 860 N.E.2d 307, 314 (Ill. 2006). If the policy is unambiguous, the Court must construe it according to the plain and ordinary meaning of its terms unless doing so would violate public policy. Nicor, Inc. v. Associated Elec. & Gas Ins. Servs. Ltd., 860 N.E.2d 280, 286 (Ill. 2006). On the other hand, if the insurance policy is ambiguous, the Court must construe all ambiguities in favor of the insured and against the insurer, who drafted the policy. Valley Forge, 860 N.E.2d at 314. In comparing the policy and the underlying complaint, the Court must construe the documents liberally in favor of the insured. Country Mut. Ins. Co. v. Carr, 867 N.E.2d 1157, 1160 (Ill.App.Ct. 2007). Generally, the insured bears the burden of proving the claim is covered under a policy's grant of coverage, and the insurer bears the burden of proving an exclusion applies. Addison Ins. Co. v. Fay, 905 N.E.2d 747, 752 (Ill. 2009).
The Court now turns to the question of whether the Cook's underlying lawsuit alleges claims potentially covered by the Garage Policy. The Garage Policy is crystal clear that, under Division I or II coverage, it covers bodily injury arising out of an automobile not owned, hired leased, rented, or registered by the insured or an officer, if it is a corporation. Policy Section II, Coverage A, § 1.b(1) (Doc. 46-1 at 17). Highland was the insured and Schuster was an officer of Highland, and they both owned the Econoline van. Thus, there was no coverage under this section for bodily injuries arising from the Econoline van, including from the collision between Dahmer and the van. The only identified Garage Policy provision that would potentially cover bodily injuries arising out of automobiles owned by the insured is Division I coverage, which Highland did not purchase. Id. at § 1.b(2) (Doc. 46-1 at 17-18).
Additionally since there is no coverage of the Econoline van under Section II, there is also no underinsured motorist coverage arising from an accident with that van. Policy, Underinsured Motorist Coverage, § 2.a (Doc. 46-1 at 50). Neither Highland nor Schuster has pointed to any other provision in the...
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